Crypto investments could dwarf traditional stocks and ISAs, analyst warns

“It seems that the country’s savings and investment preferences are split between two extremes: the world of extremely low risk, low return savings … and the high stakes of getting rich quick or losing it all. to try the world of cryptocurrency, “said Becky O’Connor, of the interactive investor

According to an analyst, there is a risk that cryptocurrency investments will become more popular than traditional equity and equity ISAs at current growth rates.

On Thursday, Becky O’Connor, director of annuities and savings at the online investment platform Interactive Investor, made the assessment after a new investigation by the Financial Conduct Authority (FCA) found that 2.3 million adults now own some crypto assets , an increase of 21% in 2020, while the number of ISA share subscriptions increased by only 12.5% ​​to 2.7 million according to the latest available figures.

READ: Around 14% of crypto investors take out loans to fund purchases, data shows

“At current growth rates, there is a risk that crypto will become more popular than traditional stocks and equity ISAs,” O’Connor said, although she added that lockdown savings increased the number of people who have invested in stocks and equity ISAs since then , could have increased last April, the results of which have yet to be reflected in official data.

“Even so, the regulator needs to look seriously at the drivers behind this trend and whether it is in the interests of people’s financial well-being that assets are so polarized and either kept in cash, where value is being eroded by inflation, or in crypto, where it could reasonably be assumed that tomorrow I’ll lose everything.

“It seems that the country’s saving and investment preferences are split between two extremes: the ultra-low-risk, low-return world of saving, where the value of money is being undermined every day by inflation, and the high stakes, um to get rich. quick-or-lose-everything-try world of crypto. The balance between slow and steady long-term investments in global stocks and equities could potentially lose popularity with both, despite the positive impact on people’s long-term financial security of ISAs and annuities, “the analyst added.

The growing number of crypto investors in crypto wasn’t the only piece of data in the FCA’s investigation that raised alarm bells in the financial sector. The report also shows that 14% of crypto investors had borrowed money to fund their digital assets.

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